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Question

Funds required for purchasing current assets is an example of

(a) Fixed capital requirement

(b) Ploughing back of profits

(c) Working capital requirement

(d) Lease financing

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Solution

Current assets are generally used for the day-to-day operations of a business. The funds that a company requires for undertaking day-to-day operations, such as purchase of raw materials and payment of wages and salaries, are part of its working capital requirements. Thus, the funds that a firm requires for purchasing current assets are part of its working capital requirements.

Hence, the correct answer is option (c).


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